BOE keeps interest rates on hold at 0.1%

Defying market sentiments, the Bank of England (BOE) has once again kept the base rate at its historically low level of 0.1%. The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-2 to maintain Bank Rate at 0.1%. The move was to ease pressure on the UK economy through the Covid-19 pandemic and keep borrowing costs low.

Although the rate will remain at 0.1% for at least another month, industry pundits are unanimous a rise is on the cards in the near future and as such mortgage holders, particularly those on variable rates are being urged to brace themselves.

According to The Guardian, a spokesperson for the Bank said the respite from higher rates might prove temporary, warning that if the economy performed as it expects, “it will be necessary over the coming months” to raise rates to hit the government’s 2% target.

The news report suggests that the MPC now think that it will take until the first three months of 2022 – a quarter later than it previously thought – for the economy to regain all the ground lost during the Covid-19 pandemic.

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